Questar Corp. (NYSE:STR) net income grew 35% in 2008 to $683.8
million, or $3.88 per diluted share, compared to $507.4 million, or
$2.88 per diluted share, for the prior year. In the fourth quarter
of 2008, Questar net income was $121.2 million, or $0.69 per
diluted share, compared to $130.8 million, or $0.74 per diluted
share, for the 2007 period, a 7% decrease. Reported 2008 and
fourth-quarter net income included net mark-to-market losses on
natural gas basis-only swaps of $49.7 million, or $0.28 per diluted
share and $54.3 million or $0.31 per diluted share, respectively.
Questar net income included $40.6 million of after-tax gains on
asset sales during 2008, including $1.4 million in the fourth
quarter. Excluding the effect of net mark-to-market losses on
natural gas basis-only swaps and after-tax gains on asset sales,
Questar�s net income was $692.9 million or $3.93 per diluted share
for 2008 and $174.1 million or $0.99 per diluted share in the
fourth quarter.
NET INCOME BY
SUBSIDIARY
(in millions, except earnings per
share)
� � � � 3 Months Ended
December 31,
�
12 Months Ended
December 31,
�
2008 �
2007 Change
2008 �
2007 Change Market
Resources Questar E&P $47.9 $65.2 (27 )% $408.0 $285.5 43 %
Wexpro 18.5 15.8 17 73.9 59.2 25 Gas Management 16.8 14.7 14 81.5
55.3 47 Energy Trading and other
3.3 4.8
(31 )
22.1 20.8 6
Market Resources
Total 86.5 100.5 (14 ) 585.5 420.8 39 �
Questar Pipeline
14.0 11.8 19 58.0 45.0 29
Questar Gas 20.4 17.9 14 40.2 37.4
7
Corporate 0.3 0.6 (50 )
0.1 4.2 (98 )
QUESTAR CORPORATION
TOTAL $121.2 $130.8
(7 )% $683.8
$507.4 35 % � Earnings per
diluted share $0.69 $0.74 $3.88 $2.88 Average diluted shares 175.7
176.0 176.1 175.9
�Questar posted double-digit net income growth for the
sixth-straight year � driven by a 22% increase in natural gas and
oil-equivalent production in Questar E&P and record net income
in all six Questar business units,� said Keith O. Rattie, Questar
Chairman, President and CEO. �But 2009 shapes up to be a very tough
year for the U.S. economy, the natural gas industry, and thus for
our company. We�re well positioned to weather the storm, but we�ve
lowered 2009 earnings and production guidance to reflect
significantly lower energy prices, and lower capital spending,�
Rattie added.
2008 Highlights
- Questar E&P grew natural
gas, oil and natural gas liquids (NGL) production 22% to 171.4
billion cubic feet of natural gas equivalent (Bcfe) compared to
140.2 Bcfe in 2007. Natural gas comprised 89% of reported
production volumes. Questar E&P replaced 304% of 2008
production and grew proved reserves 19% to 2,218 Bcfe at year-end
2008.
- Average realized natural gas
prices at Questar E&P increased $1.11 per thousand cubic feet
(Mcf), or 17%, and average realized crude oil and NGL prices
increased $18.97 per barrel (bbl), or 35%. Natural gas hedges
increased reported revenues by $125.8 million, while oil hedges
decreased revenues by $31.9 million.
- Net mark-to-market losses on
natural gas basis-only hedges decreased net income $49.7 million in
2008 compared to a gain of $3.6 million a year-earlier.
- Sales of non-core assets at
Questar E&P increased net income $37.9 million in 2008 compared
to a net loss of $0.4 million in the year-earlier period.
- Wexpro grew its investment base
37% to $410.6 million at December 31, 2008. Wexpro produced 46.1
Bcf of cost-of-service gas for delivery to affiliate Questar Gas,
up 32% from 34.9 Bcf in 2007. In 2007 Questar Gas elected to defer
some Wexpro production and purchased replacement gas at low
regional prices.
- Gas Management net income grew
47%, driven by higher gathering and processing margins. Net
processing revenues increased 36% to $88.4 million due to a 59%
increase in fee-based processing volumes and higher keep-whole
processing margins.
- Questar Pipeline grew net income
to $58.0 million in 2008, a 29% increase from 2007, driven by
higher transportation revenues from expansion projects completed in
the fourth quarter of 2007 and higher NGL sales.
- Questar Gas earned $40.2
million, 7% more than a year ago, driven by customer growth.
- Questar earned a 16.2% return on
assets (ROA � defined as earnings before interest and income taxes
divided by average total assets) for the trailing 12-month period
ended December 31, 2008. Market Resources ROA was 19.4%; Questar
Pipeline ROA was 10.8%; and Questar Gas ROA was 7.2%.
Questar Updates 2009 EPS and Production Guidance
Questar now expects full-year 2009 net income to range from
$2.50 to $2.70 per diluted share compared to previous guidance of
$3.05 to $3.25 per diluted share. The company now estimates that
Questar E&P 2009 production will range from 180 to 186 Bcfe,
compared to 185 to 193 Bcfe in prior guidance, up about 5 to 9%
from 2008. This revised guidance assumes significantly lower
natural gas and oil prices than reflected in prior guidance.
Revised 2009 guidance also assumes capital expenditures of $1.3
billion, versus $1.6 billion in prior guidance, with most of the
reduction at Questar E&P. Questar capital expenditures totaled
$2.5 billion in 2008, including about $700 million associated with
gas and oil property acquisitions.
The company�s guidance assumes hedges in place on the date of
this release and excludes mark-to-market gains and losses on
basis-only swaps and any net gains and losses on asset sales. These
and other assumptions are summarized in the table below:
Guidance Assumptions
� �
�
2009 2009
Current
Previous
Earnings per diluted share $2.50-$2.70 $3.05-$3.25 Average diluted
shares (millions) 177.3 177.3 Questar E&P capital spending
(millions) $841 $1,050 Questar E&P production � Bcfe 180-186
185-193 Pinedale well completions 93-95 93-95 NYMEX gas price per
MMBtu(a) $4.50-$5.50 $6.50-$7.50 NYMEX crude oil price per bbl(a)
$45.00-$55.00 $70.00-$80.00 NYMEX/Rockies basis differential per
MMBtu(a) $3.00-$1.50 $3.50-$2.00 NYMEX/Midcontinent basis
differential per MMBtu(a) $2.00-$1.00 $2.00-$1.00
(a)For 2009 unhedged volumes
- Questar E&P has hedged about
72% of forecast natural gas and oil-equivalent production for 2009
with fixed-price swaps. Additionally, the company has hedged about
14% of forecast 2009 production with natural gas basis-only swaps
(see table at the end of this release).
- The company estimates that a
$1.00 per MMBtu change in the average NYMEX price of natural gas
for 2009 would result in about an $0.08 change in earnings per
diluted share.
- The company also estimates that
a $10.00 per barrel change in the average NYMEX price of oil for
2009 would result in about a $0.07 change in earnings per diluted
share.
Questar E&P Grows Production 22% in 2008; Net Income Up
43%
Questar E&P � a Market Resources subsidiary that acquires,
explores for, develops and produces natural gas and oil � reported
production of 171.4 Bcfe in 2008 compared to 140.2 Bcfe in 2007, a
22% increase. Higher realized natural gas, crude oil and NGL prices
and growing production more than offset a 17% increase in average
production costs. Increased production costs were driven by higher
production taxes, interest expense and depreciation, depletion and
amortization expense. Net mark-to-market losses on natural gas
basis-only swaps decreased net income $49.7 million in 2008
compared to a $3.6 million gain in 2007. Sales of non-core assets
increased net income $37.9 million in 2008 compared to a $0.4
million loss in 2007.
In the fourth quarter of 2008, Questar E&P net income
decreased 27% to $47.9 million compared to $65.2 million a year
earlier. Net mark-to-market losses on natural gas basis-only swaps
decreased fourth-quarter 2008 net income $54.3 million, offsetting
the benefit of a 28% increase in production volumes and higher
realized gas prices. Impairment expense increased $29.9 million in
the quarter-to-quarter comparison as a result of higher total
production costs combined with lower gas and oil prices.
Questar E&P � Production by
Region
� � 3 Months Ended 12 Months Ended December 31, December 31,
2008 �
2007 �
Change
2008 �
2007 �
Change (Bcfe)
(Bcfe) Pinedale Anticline 15.6 12.4 26 % 56.8 47.4 20 % Uinta Basin
7.2 6.7 7 26.9 25.4 6 Rockies Legacy
4.9
3.2 53
19.9 16.4 21 Subtotal
� Rocky Mountains 27.7 22.3 24 103.6 89.2 16 Midcontinent
18.3 13.6 35
67.8
51.0 33
Total Questar E&P
46.0 35.9 28
% 171.4 140.2
22 %
Questar E&P � Realized
Prices and Hedging Impact
� � � � 3 Months Ended 12 Months Ended December 31, December 31,
2008 �
2007 �
Change
2008 �
2007 �
Change �
Realized natural gas price ($ per Mcf) $7.70 $6.57 17 % $7.56 $6.45
17 % Natural gas hedging impact ($ per Mcf) 3.38 2.32 0.83 2.01 �
Realized oil and NGL price ($ per bbl) $52.08 $60.66 (14 )% $72.96
$53.99 35 % Oil and NGL hedging impact ($ per bbl) 6.03 (13.40 )
(9.78 ) (5.66 ) � Net mark-to-market gains (losses) on natural gas
basis-only swaps ($ millions) Pre-tax ($86.7 ) ($8.5 ) ($79.2 )
$5.7 After-tax ($54.3 ) ($5.3 ) ($49.7 ) $3.6
Questar may enter into derivative transactions on up to 100% of
forecast production from proved reserves to lock in acceptable
returns on invested capital and to protect cash flow and net income
from a decline in commodity prices. The company uses natural gas
basis-only swaps to protect cash flows and net income from widening
natural gas-price basis differentials that may result from capacity
constraints on regional gas pipelines.
Questar E&P production costs (the sum of depreciation,
depletion and amortization expense, lease operating expense,
general and administrative expense, allocated interest expense, and
production taxes) per unit of gas-equivalent production increased
17% compared to 2007, due primarily to increased depreciation,
depletion and amortization expense, production taxes and allocated
interest expense.
Questar E&P � Production
Costs
� � 3 Months Ended 12 Months Ended December 31, December 31, (per
Mcfe) � (per Mcfe) �
2008 �
2007
Change 2008 �
2007
Change Depreciation, depletion and amortization $2.14
$1.80 19 % $1.93 $1.74 11 % Lease operating expense 0.76 0.64 19
0.73 0.63 16 General and administrative expense 0.30 0.37 (19 )
0.33 0.40 (18 ) Allocated interest expense 0.35 0.18 94 0.34 0.18
89 Production taxes
0.37 0.48 (23 )
0.61 0.43 42
Production costs
$3.92 $3.47 13
% $3.94 $3.38
17 %
- Production volume-weighted
average depreciation, depletion and amortization per Mcfe (the
DD&A rate) increased due to higher costs for drilling,
completion and related services, increased cost of steel casing,
other tubulars and wellhead equipment. The DD&A rate also
increased due to the ongoing depletion of older, lower-cost
reserves and the increasing component of Questar E&P production
derived from recently acquired, higher-cost fields in the
Midcontinent.
- Lease operating expense per Mcfe
increased due to higher costs of materials and consumables,
increased produced-water disposal costs and increased well-workover
activity.
- General and administrative
expense per Mcfe decreased as the result of increased
production.
- Allocated interest expense per
unit of production increased primarily due to financing costs
related to the first quarter 2008 acquisition of natural gas
development properties in northwest Louisiana.
- Production taxes per Mcfe
increased in 2008 as the result of higher natural gas and oil sales
prices. The company pays production taxes based on a percentage of
sales prices, excluding the impact of hedges. Production taxes per
Mcfe decreased in the fourth quarter compared to the 2007 quarter
due to lower natural gas and oil sales prices.
Wexpro Net Income Up 25% in 2008
Wexpro � a Market Resources subsidiary that develops and
produces cost-of-service reserves for affiliate Questar Gas �
benefited from a higher average investment base compared to the
prior-year period. Wexpro investment base at December 31, 2008, was
$410.6 million compared to $300.4 million a year ago, a 37%
increase. In the fourth quarter of 2008, Wexpro net income was
$18.5 million compared to $15.8 million for the prior year, a 17%
increase, primarily due to a higher investment base.
Under a long-standing agreement with the states of Utah and
Wyoming, Wexpro recovers its costs and earns an unlevered after-tax
return of about 19 to 20% on its investment base � the investment
in commercial wells and related facilities, adjusted for working
capital and reduced for deferred income taxes and accumulated
depreciation.
Gas Management Net Income Up 47% in 2008
Questar Gas Management (Gas Management) � Market Resources�
gas-gathering and processing-services business � grew net income
47% in 2008, driven by increased gathering and processing margins.
Gathering margin increased $49.8 million or 74%, and processing
margin increased $22.7 million or 41%. Net processing revenues rose
36% to $88.4 million due to increased fee-based processing volumes
and a greater frac-spread � the difference between the market value
of the NGL extracted from the gas stream and the cost of the
Btu-equivalent volume of natural gas required to replace the
extracted liquids. Gas Management grew fee-based gas-processing
volumes 59% in 2008 to 201.5 million MMBtu. Fee-based
gas-processing revenues grew 57% compared to a year ago, while
keep-whole processing margin increased 28% or $12.4 million.
Approximately 76% of Gas Management net operating revenue (total
revenue less processing plant-shrink) was derived from fee-based
contracts compared to 74% in 2007. In the fourth quarter of 2008,
Gas Management net income increased 14% to $16.8 million compared
to $14.7 million in 2007, driven by higher gathering margins.
Questar Pipeline Net Income Up 29% in 2008
Questar Pipeline � which provides interstate natural gas
transportation and storage services � grew net income 29% in 2008.
Revenues increased $42.7 million or 21%, driven by higher
transportation volumes related to system expansion projects placed
into service in late 2007, and higher NGL prices. NGL prices
increased 43% and sales volumes increased 18% in the year over year
comparison. Operating and maintenance expense increased $5.8
million due to additional operating costs for new transportation
facilities. Operating, maintenance, general and administrative
expenses totaled $0.10 per decatherm transported, down from $0.14
in the year earlier, the net result of a 53% increase in
transportation volumes and a 7% increase in these expenses. 2008
net income was reduced by $1.9 million for asset impairments,
offset by net gains on the sale of assets and other one-time
items.
Questar Pipeline net income rose 19% to $14.0 million in the
fourth quarter of 2008 compared to $11.8 million in the year-ago
period, primarily due to system expansions placed in service late
in 2007.
Questar Gas Net Income Up 7% in 2008
Questar Gas � which provides retail natural gas distribution
services in Utah, Wyoming and Idaho � reported higher net income,
driven by customer growth and an increase in Utah general rates
effective August 2008, partially offset by higher expenses,
primarily bad-debt expense, demand-side management costs and
interest expense. Operating, maintenance, general and
administrative expenses totaled $142 per customer in 2008, compared
to $136 per customer in 2007. At December 31, 2008, Questar Gas
served 888,602 customers, up 14,995 or 1.7% from December 31,
2007.
Questar Gas net income was $20.4 million in the fourth quarter
of 2008, 14% higher than the year-earlier period, primarily as a
result of customer growth.
2008 Earnings Teleconference
Questar management will discuss 2008 results and the outlook for
2009 in a conference call with investors Thursday, February 12,
beginning at 9:30 a.m. EST. The call can be accessed on the company
Internet site at www.questar.com.
About Questar
Questar Corp. (NYSE:STR) is a natural gas-focused energy company
with an enterprise value of about $8.5 billion. Questar finds,
develops, produces, gathers, processes, transports, stores and
distributes natural gas.
Forward-Looking Statements
This release includes forward-looking statements within the
meaning of Section 27(a) of the Securities Act of 1933, as amended,
and Section 21(e) of the Securities Exchange Act of 1934, as
amended. Such statements are based on management�s current
expectations, estimates and projections, which are subject to a
wide range of uncertainties and business risks. Factors that could
cause actual results to differ from those anticipated are discussed
in the company�s periodic filings with the Securities and Exchange
Commission, including its annual report on Form 10-K for the year
ended December 31, 2007. Questar undertakes no obligation to
publicly correct or update the forward-looking statements in this
news release, in other documents, or on the Web site to reflect
future events or circumstances. All such statements are expressly
qualified by this cautionary statement.
For more information, visit Questar�s Internet site at:
www.questar.com.
Hedge Positions � February 11,
2009
� � � � � � Time Periods �
Rocky
Mountains
� Midcontinent � Total � Rocky
Mountains
� Midcontinent � Total �
Estimated Gas (Bcf) fixed-price
swaps Average price per Mcf, net to the well 2009
First half 34.5 29.5 64.0 $7.24 $8.12 $7.65 Second half 35.0 � 30.0
� 65.0 7.24 8.12 7.65 12 months 69.5 59.5 129.0 7.24 8.12 7.65 �
2010 First half 11.7 26.2 37.9 $5.46 $8.09 $7.27 Second half
12.0 � 26.6 � 38.6 5.46 8.09 7.27 12 months 23.7 52.8 76.5 5.46
8.09 7.27 �
Estimated Gas (Bcf) basis-only swaps
Average basis per Mcf vs. NYMEX 2009 First half 9.3
3.3 12.6 $2.94 $1.22 $2.49 Second half 9.4 � 3.4 � 12.8 2.94 1.22
2.49 12 months 18.7 6.7 25.4 2.94 1.22 2.49 �
2010 First
half 25.2 6.6 31.8 $3.54 $0.95 $3.00 Second half 25.5 � 6.8 � 32.3
3.54 0.95 3.00 12 months 50.7 13.4 64.1 3.54 0.95 3.00 �
2011 First half 45.3 6.9 52.2 $2.29 $0.79 $2.09 Second half
46.1 � 6.9 � 53.0 2.29 0.79 2.09 12 months 91.4 13.8 105.2 2.29
0.79 2.09
Hedge Positions � February 11,
2009
� � � � � � Time Periods � Rocky
Mountains
� Midcontinent � Total � Rocky
Mountains
� Midcontinent Total
Estimated Oil (Mbbl) fixed-price
swaps Average price per Bbl, net to the well �
2009 First half 217 145 362 $60.55 $66.55 $62.95 Second half
221 � 147 � 368 60.55 66.55 62.95 12 months 438 292 730 60.55 66.55
62.95 QUESTAR CORPORATION CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) � � 3 Months Ended December 31, � 12 Months Ended
December 31,
2008 � 2007
2008 � 2007 � � � � Restated
� � � � (in millions, except per share amounts) REVENUES Market
Resources (1)
$507.6 $423.1
$2,297.2 $1,671.3 Questar
Pipeline
41.9 33.7
173.7 127.7 Questar Gas �
329.3 � � 286.7 � �
994.2 � � 927.6 � Total Revenues
(1)
878.8 743.5
3,465.1 2,726.6 � OPERATING EXPENSES
Cost of natural gas and other products sold (excluding operating
expenses shown separately) (1)
245.8 259.0
1,007.6
917.1 Operating and maintenance
97.6 76.7
374.0 298.6
General and administrative
43.1 46.5
159.7 165.4
Production and other taxes
27.2 22.8
164.9 101.0
Depreciation, depletion and amortization
142.5 95.7
494.4 369.1 Exploration
14.6 15.3
29.3 22.0
Abandonment and impairment �
38.5 � � 4.8 � �
59.4 �
� 11.2 � Total Operating Expenses (1)
609.3 520.8
2,289.3 1,884.4 Net gain (loss) from asset sales �
2.3 � � (1.2 ) �
64.7 � � (0.9 ) Operating Income
271.8 221.5
1,240.5 841.3 Interest and other income
9.7 4.7
26.7 14.3 Minority interest
(2.1
) (9.0 ) Income from unconsolidated affiliates
1.0 2.1
2.3 8.9 Net mark-to-market gain (loss) on
basis-only swaps
(86.7 ) (8.5 )
(79.2 )
5.7 Interest expense �
(28.6 ) � (19.2 ) �
(119.5 ) � (72.2 ) Income Before Income Taxes
165.1 200.6
1,061.8 798.0 Income taxes �
43.9
� � 69.8 � �
378.0 � � 290.6 � Net Income �
$121.2 �
� $130.8 � �
$683.8 � � $507.4 � � EARNINGS PER COMMON SHARE
Basic
$0.70 $0.76
$3.96 $2.95 Diluted
0.69
0.74
3.88 2.88 Weighted-Average Common Shares Outstanding
Basic
173.0 172.3
172.8 172.0 Diluted
175.7
176.0
176.1 175.9 Dividends Per Common Share
$0.125
$0.1225
$0.4925 $0.485 � (1) Disclosures with respect to
operations by line of business have been restated to correct for
errors related to intercompany elimination of natural gas and crude
oil sales between Questar E&P and Energy Trading. The
restatement did not impact net income, operating income, the
Condensed Consolidated Balance Sheets or the Condensed Consolidated
Statement of Cash Flows. QUESTAR CORPORATION OPERATIONS BY LINE OF
BUSINESS (Unaudited) � � 3 Months Ended December 31, 12 Months
Ended December 31,
2008 � 2007
2008 � 2007 � � � �
Restated � � � � (in millions)
Revenues from Unaffiliated
Customers Questar E&P
$362.0 $254.0
$1,392.1
$956.0 Wexpro
2.3 4.2
31.1 21.6 Gas Management
56.8 51.5
265.9 189.3 Energy Trading and other (1) �
86.5 � � 113.4 � �
608.1 � � 504.4 Market Resources
(1)
507.6 423.1
2,297.2 1,671.3 Questar Pipeline
41.9 33.7
173.7 127.7 Questar Gas �
329.3 � �
286.7 � �
994.2 � � 927.6 Total (1) �
$878.8 � �
$743.5 � �
$3,465.1 � � $2,726.6 �
Revenues from
Affiliated Companies Wexpro
$56.5 $37.3
$209.9
$155.7 Gas Management
6.9 4.9
24.3 17.0 Energy
Trading and other (1) �
121.2 � � 140.5 � �
834.5 � �
484.1 Market Resources (1)
184.6 182.7
1,068.7 656.8
Questar Pipeline
18.5 19.2
74.9 78.2 Questar Gas � �
� 0.5 � �
6.1 � � 4.9 Total (1) �
$203.1 � � $202.4 �
�
$1,149.7 � � $739.9 �
Operating Income (Loss)
Questar E&P
$150.8 $115.6
$762.0 $472.6 Wexpro
28.0 23.0
111.3 89.3 Gas Management
25.9 22.8
139.4 84.6 Energy Trading and other �
3.6 � � 5.7 � �
31.8 � � 26.9 Market Resources
208.3 167.1
1,044.5 673.4 Questar Pipeline
25.2 21.6
112.9
91.0 Questar Gas
39.4 33.0
84.2 76.1 Corporate �
(1.1 ) � (0.2 ) �
(1.1 ) � 0.8 Total �
$271.8 � � $221.5 � �
$1,240.5 � � $841.3 �
Net
Income Questar E&P
$47.9 $65.2
$408.0 $285.5
Wexpro
18.5 15.8
73.9 59.2 Gas Management
16.8
14.7
81.5 55.3 Energy Trading and other �
3.3 � � 4.8
� �
22.1 � � 20.8 Market Resources
86.5 100.5
585.5 420.8 Questar Pipeline
14.0 11.8
58.0
45.0 Questar Gas
20.4 17.9
40.2 37.4 Corporate �
0.3 � � 0.6 � �
0.1 � � 4.2 Total �
$121.2 � �
$130.8 � �
$683.8 � � $507.4 � (1) Disclosures with respect
to operations by line of business have been restated to correct for
errors related to intercompany elimination of natural gas and crude
oil sales between Questar E&P and Energy Trading. The
restatement did not impact net income, operating income, the
Condensed Consolidated Balance Sheets or the Condensed Consolidated
Statement of Cash Flows. QUESTAR CORPORATION SELECTED OPERATING
STATISTICS (Unaudited) � � 3 Months Ended December 31, � 12 Months
Ended December 31, � �
2008 � 2007 �
2008 � 2007
MARKET RESOURCES � � Questar E&P production volumes
Natural gas (Bcf)
40.9 30.9
151.9 121.9 Oil and
natural gas liquids (MMbbl)
0.9 0.8
3.3 3.0 Total
production (Bcfe)
46.0 35.9
171.4 140.2 Average daily
production (MMcfe)
500.2 389.8
468.3 384.1 Questar
E&P average realized price, net to the well (including hedges)
Natural gas (per Mcf)
$7.70 $6.57
$7.56 $6.45 Oil and
NGL (per bbl)
$52.08 $60.66
$72.96 $53.99 Wexpro
investment base at Dec. 31, net of depreciation and deferred income
taxes (millions)
$410.6 $300.4 Natural gas processing
volumes NGL sales (MMgal)
23.6 22.0
89.5 76.5 NGL
sales price (per gal)
$0.64 $1.07
$1.18 $0.98
Fee-based processing (millions of MMBtu) (1) For unaffiliated
customers
17.1 9.2
87.4 44.1 For affiliated customers
�
33.5 � � 19.7 � �
114.1 � � 82.5 � Total fee-based
processing volumes �
50.6 � � 28.9 � �
201.5 � �
126.6 � Fee-based processing (per MMBtu)
$0.16 $0.15
$0.14 $0.15 Natural gas gathering volumes (millions of
MMBtu) (1) For unaffiliated customers
60.4 35.1
224.0
162.1 For affiliated customers �
46.8 � � 30.9 � �
168.5 � � 128.1 � Total gathering �
107.2 � � 66.0 �
�
392.5 � � 290.2 � Gathering revenue (per MMBtu) (1)
$0.29 $0.36
$0.31 $0.32 Natural gas and oil marketing
volumes (MMdthe)
49.2 51.2
195.2 201.4
QUESTAR
PIPELINE Natural gas transportation volumes (MMdth) For
unaffiliated customers
153.2 100.6
608.1 352.3 For
Questar Gas
32.5 32.1
120.9 113.8 For other
affiliated customers �
4.0 � � 4.1 � �
9.2 � � 16.0 �
Total transportation �
189.7 � � 136.8 � �
738.2 � �
482.1 � Transportation revenue (per dth)
$0.23 $0.25
$0.23 $0.26 Firm-daily transportation demand at Dec. 31,
(including White River Hub of 1,005 Mdth in 2008)
4,155
3,112 Natural gas processing NGL sales (MMgal)
2.1 1.1
8.5 7.2 NGL sales price (per gal)
$0.83 $1.64
$1.70 $1.19
QUESTAR GAS Natural gas volumes (MMdth)
Residential and commercial �
33.9 � � 36.0 � �
112.3
� � 106.1 � Industrial
0.4 0.5
1.7 1.6 Transportation
for industrial customers �
16.4 � � 18.9 � �
62.2 � �
53.8 � Total industrial �
16.8 � � 19.4 � �
63.9 � �
55.4 � Total deliveries �
50.7 � � 55.4 � �
176.2 � �
161.5 � Natural gas revenue (per dth) Residential and commercial
sales
$9.27 $7.65
$8.25 $8.26 Industrial
6.96
5.93
6.99 6.18 Transportation for industrial customers
$0.19 $0.16
$0.16 $0.18 Temperatures - colder
(warmer) than normal
(2 %) 5 %
8 % 2 %
Temperature-adjusted usage per customer (dth)
36.0 37.6
109.9 110.8 Customers at Dec. 31, (thousands)
888.6
873.6 (1) one MMBtu = one dth QUESTAR CORPORATION PRELIMINARY
CONDENSED CONSOLIDATED BALANCE SHEETS � �
December 31,
December 31,
2008 2007 � �
(Unaudited) � � (in
millions) ASSETS Current Assets Cash and cash equivalents
$23.9 $14.2 Accounts receivable, net
482.4 417.8 Fair
value of derivative contracts
431.3 78.1 Inventories
192.4
115.0 Prepaid expenses and other �
55.0 � � 33.8 � Total
Current Assets �
1,185.0
� � 658.9 � Property, Plant and Equipment
10,235.5 7,741.9
Accumulated depreciation, depletion and amortization �
(3,096.8 ) � (2,643.3 ) Net Property, Plant and
Equipment �
7,138.7 � � 5,098.6 � Investment in
unconsolidated affiliates
68.4 52.8 Goodwill
70.0
70.7 Fair value of derivative contracts
106.3 7.8 Other
noncurrent assets, net �
68.0 � � 55.4 � Total Assets �
$8,636.4
� � $5,944.2 � � LIABILITIES AND SHAREHOLDERS' EQUITY Current
Liabilities Short-term debt
$231.1 $260.6 Accounts payable
and accrued expenses
681.6
564.5 Fair value of derivative contracts
0.5 9.3
Purchased-gas adjustment
45.8 58.1 Deferred income taxes -
current
130.6 4.9 Current portion of long-term debt �
42.0 � � 101.3 � Total Current Liabilities �
1,131.6
� � 998.7 � Long-term debt, less current portion
2,078.9
1,021.2 Deferred income taxes
1,334.1 942.4 Fair value of
derivative contracts
69.0 22.1 Other long-term liabilities
575.3 381.9 Minority interest
29.5 Common
Shareholders' Equity �
3,418.0 � � 2,577.9 � Total
Liabilities and Common Shareholders' Equity �
$8,636.4
� � $5,944.2 � QUESTAR CORPORATION PRELIMINARY CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) � � � 12 Months
Ended December 31, � �
2008 � � 2007 � (in millions)
OPERATING ACTIVITIES Net income
$683.8 $507.4 Adjustments to
reconcile net income to net cash provided from operating
activities: Depreciation, depletion and amortization
502.1
375.8 Deferred income taxes
377.1 191.2 Share-based
compensation
16.7 12.9 Abandonment and impairment
59.4 11.2 Dry exploratory well expense
9.7 12.3 Net
(gain) loss from asset sales
(64.7 ) 0.9 Minority
interest
9.0
�
(Income) from unconsolidated affiliates
(2.3 ) (8.9 )
Distributions from unconsolidated affiliates
0.5 10.4 Net
mark-to-market (gain) loss on basis-only swaps
79.2 (5.7 )
Other
(2.0 ) (1.0 ) Changes in operating assets and
liabilities �
(172.3 ) � 34.5 � Net Cash Provided
From Operating Activities �
1,496.2 � � 1,141.0 � �
INVESTING ACTIVITIES Capital expenditures
(2,485.7 )
(1,398.3 ) Cash used in disposition of assets
(3.7 )
(1.3 ) Proceeds from disposition of assets �
130.7 � � 14.5
� Net Cash Used In Investing Activities �
(2,358.7 )
� (1,385.1 ) � FINANCING ACTIVITIES Common stock
(8.2
) (4.3 ) Long-term debt issued, net of issuance costs
1,741.7 100.0 Long-term debt repaid
(751.3 )
(10.0 ) Change in short-term debt
(29.5 ) 220.6
Distribution to minority interest
(9.3 ) Excess tax
benefits from share-based compensation
13.2 11.1 Dividends
paid
(85.4 ) (83.7 ) Other �
1.0 � � � Net
Cash Provided From Financing Activities �
872.2 � � 233.7 �
� Change in cash and cash equivalents
9.7 (10.4 ) Beginning
cash and cash equivalents �
14.2 � � 24.6 � Ending Cash and
Cash Equivalents �
$23.9 � � $14.2 �
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